Always Invert

[Quiet Guy]

I'm not sure where to put this on the forums - it's as much about psychology as investments - but anyway, I think it is a bit interesting.

A good investment process is really difficult to achieve and even harder to sustain. The variables are many and the problems challenging. Charlie Munger borrowed a highly useful idea from the great 19th Century German mathematician Carl Jacobi that provides a helpful way to deal with the myriad problems investors face in trying to establish a good investment process.

...

The key investment application (beyond the benefits of inverting the problems we face generally) is that in most cases we'd be better served by looking closely at the examples of people and portfolios that failed and why instead of the success stories

http://pragcap.com/i...t-always-invert

[R K]

I'm not sure where to put this on the forums - it's as much about psychology as investments - but anyway, I think it is a bit interesting.

A good investment process is really difficult to achieve and even harder to sustain. The variables are many and the problems challenging. Charlie Munger borrowed a highly useful idea from the great 19th Century German mathematician Carl Jacobi that provides a helpful way to deal with the myriad problems investors face in trying to establish a good investment process.

...

The key investment application (beyond the benefits of inverting the problems we face generally) is that in most cases we'd be better served by looking closely at the examples of people and portfolios that failed and why instead of the success stories

http://pragcap.com/i...t-always-invert

Very good yep.

It's why when Boris Johnson (for instance) claims that all the wealthy people he knows are intelligent and hard working he's only looking at the survivors. He's failed to take into account all the hardworking, intelligent people who aren't million/billionaires.

I'd like to see people like FTalphaville etc, whenever they post an article from an industry 'guru' following it up say 12 months later to test it.

My feeling is that since most of them will be wrong they'd soon run out of contributors.

[Matt999]

That's why we try to listen to the 'survivors' like Charlie Munger to see just how they survived while others fell along the wayside.

In 1989 with a friend I bought (50% share each) my first house for £81k right at the peak immediately prior to the 'great crash'. A few months later interest rates were 15% and the price had crashed by £30k. My take-home pay was £525/mth and my HALF of the mortgage was £515/mth. This seems to be the exact situation most people here are cr4pping themselves about. I was doomed, right?

WRONG! The spare rooms were being rented out and it was sold a few years later for £150k.

We're still in partnership 25 years later and we now have over 20 properties in London, selling off now as tax-efficiently as possible. Yes I'm a millionaire, paying my taxes, and still working full-time in the public sector serving the great British public.

I am intelligent, and did work extremely hard for the first few years. By age 40 I had paid off the mortgage on my own house (paid £150k, now worth about £400k) and bought a new Mercedes sports car for cash.

Call me a troll, but I really don't know what everyone here is getting their knickers in a twist about. The law of supply and demand has held true since before money was even invented, and isn't going to go wrong now. Too many people and not enough houses = long-term house price rises.

If you're THAT worried about losing money on a house, then keep your cash in the bank and live in a tent at the side of the road.

If you need somewhere to live and are reasonably sure you won't need to move in the next 5 years, buy a house. If you need a good long-term investment, buy a house. If you have too many houses and can't be bothered any more, buy shares.

[InlikeFlynn]

That's why we try to listen to the 'survivors' like Charlie Munger to see just how they survived while others fell along the wayside.

In 1989 with a friend I bought (50% share each) my first house for £81k right at the peak immediately prior to the 'great crash'. A few months later interest rates were 15% and the price had crashed by £30k. My take-home pay was £525/mth and my HALF of the mortgage was £515/mth. This seems to be the exact situation most people here are cr4pping themselves about. I was doomed, right?

WRONG! The spare rooms were being rented out and it was sold a few years later for £150k.

We're still in partnership 25 years later and we now have over 20 properties in London, selling off now as tax-efficiently as possible. Yes I'm a millionaire, paying my taxes, and still working full-time in the public sector serving the great British public.

I am intelligent, and did work extremely hard for the first few years. By age 40 I had paid off the mortgage on my own house (paid £150k, now worth about £400k) and bought a new Mercedes sports car for cash.

Call me a troll, but I really don't know what everyone here is getting their knickers in a twist about. The law of supply and demand has held true since before money was even invented, and isn't going to go wrong now. Too many people and not enough houses = long-term house price rises.

If you're THAT worried about losing money on a house, then keep your cash in the bank and live in a tent at the side of the road.

If you need somewhere to live and are reasonably sure you won't need to move in the next 5 years, buy a house. If you need a good long-term investment, buy a house. If you have too many houses and can't be bothered any more, buy shares.

since you've gone to such an effort with your trolling, I thought I'd be generous with my advice, namely that no one reads this section of the forum. To get the attention you crave you would be better off posting this on the main forum.